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Spanish Bad Loans Hit Fresh Record High Again

Tyler Durden's picture




 

In what is becoming a monthly parabolic charting tradition, it is again time to update the Spanish bad loan total: in September, Spanish loans that fell into arrears increased by €3.5 billion from August, reaching €182.2 billion in September. This is 10.71% of the total Spanish bank loans of €1.7 trillion, and an increase from 10.5% in the prior month. At the same time, new bank loans expanded 0.2% in September and dropped 4.9% from a year ago, the Bank of Spain said. Deposits rose 1.4% from the previous month and declined 7.3% from a year earlier.  Putting the bad loan number in context, it is nearly double the €100 billion that the Spanish banks will receive as part of the bank bailout plan disclosed in July, and well above the "only" €40 billion that Spain promises it will need to actually fund bank capital shortfalls. Putting it into further context, as a percentage of GDP, it would be the equivalent of $2.8 trillion in US loans going bad. Naturally, just like with any "forecast" involving Greece, the final bailout (of both Spain's banks, and the sovereign) will be orders of magnitude higher, but for now everyone is forgiven to stick their head in the sand for at least a few more days/weeks.

 

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Mon, 11/19/2012 - 09:29 | 2995508 GetZeeGold
GetZeeGold's picture

 

 

My Spanish paper is suddenly no good?

Mon, 11/19/2012 - 09:37 | 2995527 Middle_Finger_Market
Middle_Finger_Market's picture

You've been hoarding shit since day 1. 

Mon, 11/19/2012 - 09:50 | 2995558 JPM Hater001
JPM Hater001's picture

The soft fluffy kind with cute bears shitting in the woods is rising...

Every other kind not so much.

Mon, 11/19/2012 - 09:30 | 2995509 Haus-Targaryen
Haus-Targaryen's picture

Am I the only one, when I see bad news out of Europe ... my first reaction is "Sweet." 

Mon, 11/19/2012 - 09:37 | 2995529 jbvtme
jbvtme's picture

if only they owned guns

Mon, 11/19/2012 - 13:01 | 2996119 Don Diego
Don Diego's picture

they do, but authorities have the serial numbers and addresses of the owners so guns can be collected for "safekeeping" when the peasants become restless.

Mon, 11/19/2012 - 09:39 | 2995530 BlueCollaredOne
BlueCollaredOne's picture

I've become so desensitized to bad news from Europe that I no longer feel emotion to it.  It has become my status quo.

However, anytime I read some "good news" is when a true reaction occurs.  That's when I say "How the fuck did they spin that?" or "Man, they are some epic can kickers."

Mon, 11/19/2012 - 09:39 | 2995533 Middle_Finger_Market
Middle_Finger_Market's picture

Sweet in the sense that the inevitable outcome is a complete disintergartion of the financial and living systems we think we know...then no, there are others who would like to see a complete overhaul and change of humanities direction. 

Mon, 11/19/2012 - 09:53 | 2995571 Haus-Targaryen
Haus-Targaryen's picture

I'd rather make a few easy bucks sitting on my butt, drinking my Bailey's coffee, starting at a few computer screens.  Bad news out of Europe = predictability.  

 

Also, Europe deserves every oz. of this.  Trying to castrate Germany and handing money out like Halloween Candy.  Please.  The quicker the continent goes belly up the better.  

Mon, 11/19/2012 - 09:33 | 2995516 LawsofPhysics
LawsofPhysics's picture

and what do the current CDS contracts look like?  What are interest rates looking like?  Something does not add up, but I am sure that the Euro is just fine, much like the dollar.  < sarc off >

Mon, 11/19/2012 - 09:36 | 2995521 GetZeeGold
GetZeeGold's picture

 

 

They're basically worthless......can't get anyone to declare a default.

 

Mon, 11/19/2012 - 09:40 | 2995535 LawsofPhysics
LawsofPhysics's picture

correct, which means the underlying currency/currencies will collapse when trade with these banks/countries collapses (why trade with someone who offers you nothing real in exchange).  Turns out counterparty risk is very real after all, who could have guessed it?   Bloody sheep.

Mon, 11/19/2012 - 11:04 | 2995774 Never One Roach
Never One Roach's picture

Maybe the Aliens will come and save the Spaniards too?

Mon, 11/19/2012 - 09:37 | 2995524 disabledvet
disabledvet's picture

The center cannot hold. This is coming to the USA...I say imminently (as in starting next Monday)...and "thank God we got a war in the Middle East" out of the whole deal????? Never has the difference between politics and war seem so stark to me.

Mon, 11/19/2012 - 09:53 | 2995562 LawsofPhysics
LawsofPhysics's picture

Having been the third generation to serve, you know as well as I that countries and people are always at war.  Money is an illusion, power and control of resources and people has always been what it is all about.  My father (test pilot in the 60's) and grandfather (artillery in the pacific) never spoke of their experiences, although for different reasons.  Today's politicians are different from the ones of old.  Admittedly, both are puppets for the real power brokers, but at least 30-40 years ago many of them did indeed have harsh real-world experiences.

Today's politicians are ivy-league pampered experts in semantics in order to facilitate speaking out right lies without seeing them as such.  85 billion in direct monetization every month will mean the end of the dollar, period.

Counterparty risk is very real, and the reality is that life, Nature, and the laws of physics make no promises regarding anyone's survival.  We can fix the underlying moral hazard and issue of real consequences for fraud and theft or Nature will through humanity's own instinct to survive.

History shows us how this will all turn out.

Mon, 11/19/2012 - 10:26 | 2995625 forwardho
forwardho's picture

Laws,  You are there. Truth IS. The manner  that we act according to this truth, gives us a sense of control over our destiny. The first choice is to see that which is plainly "true"

 

Mon, 11/19/2012 - 09:37 | 2995525 slaughterer
slaughterer's picture

Thanks Tyler,  It is worse than we could have imagined.  But OMT should soak it all up after elections give Rajoy the keys to the State jetliner for football parties.  

Mon, 11/19/2012 - 09:44 | 2995544 desirdavenir
desirdavenir's picture

I have calculated 1.8 trillions in US$ equivalent wrt GDP...

Mon, 11/19/2012 - 09:44 | 2995545 yogibear
yogibear's picture

Where are the Germans, Bernanke and the ECB to buy everything up and save the day? Bernanke and the almighty fed indicated they will buy up all TBTF failiures and Ponzis with their printed dollars.

Mon, 11/19/2012 - 09:51 | 2995561 slaughterer
slaughterer's picture

Bernanke is giving a speech today.  Why do you think PMs are up as well?

Mon, 11/19/2012 - 10:00 | 2995548 timbo_em
timbo_em's picture

Please do not worry. Oliver Wyman will find a way to make those €182.2 billion look less scary.

Edit: When bad loans first rose dramatically in the mid 1980s, Spain joined the EU, no internal reforms. When bad loans went up the second time in 1994, the upcoming introduction of the Euro saved Spain, no internal reforms. Who will save them this time?

Mon, 11/19/2012 - 09:46 | 2995552 DollarDive
DollarDive's picture

Here's a funny story in the NYPost on DTCC and the saga of the disappearing bearer bonds: 

 

http://www.nypost.com/p/news/local/manhattan/sunken_treasure_R1WidDOAwSB...

 

I know Tyler had run a story on it a week or so ago.

Mon, 11/19/2012 - 09:46 | 2995553 SheepDog-One
SheepDog-One's picture

This dying corpse sure does have lots of last gasps in it.

Mon, 11/19/2012 - 09:47 | 2995556 LongSoupLine
LongSoupLine's picture

This is obviously bullish as futures have ramped even higher.

 

fucking horseshit.

Mon, 11/19/2012 - 09:49 | 2995557 SheepDog-One
SheepDog-One's picture

Must....pump....Black Friday....must give....retail consumer monkey.....happy feelings...

Mon, 11/19/2012 - 09:52 | 2995565 plaspotje
plaspotje's picture

and these numbers are government and bankers numbers so the bad loans are higher than that.

Mon, 11/19/2012 - 09:54 | 2995574 forwardho
forwardho's picture

10.71% decrease in the value of the top rated reserves, for which untold trillions of derivatives  have been based on. The house of cards upon which the world economy has been built on is levitating. The first of many "Kings" who are now seen to be very, very, naked.

Mon, 11/19/2012 - 10:19 | 2995652 Pretorian
Pretorian's picture

I expected more and market as well. This is good news.

Mon, 11/19/2012 - 10:49 | 2995733 Shevva
Shevva's picture

Your all missing the big indicator over the Euro, it's when Starbucks in Europe refuses to take the Euro.

What does Europe mean other than a land mass or what a load of unelected tw@ts in Brussels say it is?

Mon, 11/19/2012 - 11:01 | 2995770 falak pema
falak pema's picture

Nope; what Merkel and Draghi say it is; the combination of international Banksta Oligarchy spokesman and German Might. The rest are harem eunuchs. 

Mon, 11/19/2012 - 11:00 | 2995759 falak pema
falak pema's picture

old lamps for new; old lamps for new; old debts for new money...that ECB is a sucker for old debts. "Just keep unloading your toxic debts Rajoy...ECB buys it all!"

Mon, 11/19/2012 - 11:09 | 2995788 Tombstone
Tombstone's picture

I wonder if more debt will lead to Lehman X's 100?

Mon, 11/19/2012 - 11:13 | 2995797 Never One Roach
Never One Roach's picture

Why pay back the loans at all? This is the New paradigm......just walk away and pass the losses onto others is all the Rage.

Mon, 11/19/2012 - 11:57 | 2995912 Canucklehead
Canucklehead's picture

If you want a taste of how this all might play out, read: The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance.

There is a section in Part 1 - Panic, where in the banana republic days discussion revolved around Honduras bonds, and how to extract value.  The Google Books Link below will generate 4 results.  Click on the Previous Tab and start reading.

 http://books.google.ca/books?id=sgNUEqkgctEC&pg=PT189&lpg=PT189&dq=house...

Mon, 11/19/2012 - 14:41 | 2996393 Dareconomics
Dareconomics's picture

Spain is becoming jealous that Greece has been getting all of the media attention lately, so it strikes back today with news that its banks set another record in the bad loan department.

Spanish banks reported 10.71% of their €1.7tr loans are nonperforming. Reuters states:

The new figures won't affect the euro zone aid, aimed at cleaning up the toxic real estate assets from the lenders' balance sheets, but reflect moves by the banks to be more realistic about the extent of their bad loans.

The implication of banks being "more realistic" regarding bad loans is that they are still not being honest enough. Spain's banks are insolvent and being kept alive by huge amounts of credit from the ECB.

As usual, the situation is being sugar-coated by bureaucrats, politicians and bankers. Here are the numbers.

The Spanish banks own €95bn in Portuguese, Greek and Irish debt, and you can kiss the all but the Irish debt goodbye for now. This number is dwarfed by the bank's real estate loans and residential mortgages.

They currently have €385bn in real estate loans, and a property bubble just burst. In addition to these loans, they also have €630bn in residential mortgage loans on their books. As the economy worsens and property values drop,  more real estate loans and mortgages will go bad.

If we know anything about a banking crisis, it is that we do not learn how bad it is until the banks fail and the regulators step in to assess the damage.

For a back of the envelope calculation, let's say that the Spanish bad loan number reaches 25%, which is reasonable considering conservative economic forecasts telling us that Spain's economy will continue to shrink into 2014. One-quarter of €1.7tr is €425bn.

This number wipes out the rest of the vaunted ESM, and we have not even bailed out the Spain's government. Frankly, I believe that the northern tier will come to its sense by then and cut the periphery off.

The lies of the bureaucrats, politicians and bankers will be uncovered sooner or later. In the meantime taxpayer money courtesy of the ECB will keep the whole thing from running off the rails, but no one knows for how long.

dareconomics.wordpress.com 

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